Recent reports in Business Week and The Economist suggest that business schools are not as recession-proof as once thought.

But there is more to this than first meets the eye and there are other possible implications – Business Week reported that business school applications (particularly for MBAs but also for undergraduate degrees) have been sliding downwards since the middle of last year. The immediate impulse has been to blame the recession (and it certainly has an impact) but research is showing up a more worrying issue: business schools and particularly the MBAs are seen as being too closely aligned with the thinking that has led to the current recession – and that the degrees being offered are not supplying the skills needed – skills such as thinking and interpreting rather than simply analysing, understanding the range of strategic Read the rest of this entry »

Is there a link between the behaviour of “bankers” who have been credited with bringing down the world’s financial system as they pursued ever-greater bonuses, and British parliamentarians who have been credited with ripping off the taxpayer in an orgy of greed and dishonest expense claims?

Clearly, in the minds of much of the press and perhaps most of the public, there IS a link in that both groups have been driven by greed and avarice … or so it is assumed. But is this actually true?

The neoclassical economic approach (and the one that underpins the position of much of the press on this matter) is that both groups have been exercising rational and fully informed decision-making and have concluded that the long-term financial benefits accruing from their decisions are of far greater economic value than the costs incurred. But this is to fully misunderstand that neoclassical economic theory simply does not apply in cases where a behavioural approach makes more sense Read the rest of this entry »

Given that the majority of companies are currently run by those in their forties and fifties and that most middle managers are younger than that, it is no surprise that few in business today remember the last really major global recession, which took place nearly 28 years ago in 1980-82. There have been other economic ‘corrections’ of course, but in the 1980-82 recession 55% of developed countries experienced an extended period of flat or negative growth. Even the 1987 financial crisis and stock market ‘correction’ is outside the memories of most managers and so it comes as no surprise that they are very ill-equipped to deal with the current recession (which borders on a depression) and are panicking.

The extraordinary thing is that the current response to the economic turmoil is very similar to the failed responses to earlier recessions. Many companies are simply cutting the work force, cutting production, and cutting overheads in general – although in some sectors it is particularly noticeable that these cuts are falling disproportionately on the front line workers rather than across the business as a whole: there is little evidence that there is a thinning of management ranks as yet.

It is probably true to say that in the good times many businesses try hard to retain those workers whose performance is deemed to be below the required standard (which begs the question whether the ‘required standard’ has been realistically ascertained or whether performance figures and criteria have simply been plucked from the air) and that when times get hard these ‘poor performers’ are made redundant. In theory, this makes the company ‘leaner and meaner’ as it gets rid of those making the least contribution to the business – but in reality, responsibility for the performance of these people rests with the managers and it is these people that should be looked at very carefully.

The other failed approach to redundancy is the ‘last in, first out’ strategy. Read the rest of this entry »